US House backs $3.6 trillion budget

Obama hailed the move as another step towards rebuilding the struggling US economy [AFP]

"By making hard choices and challenging the old ways of doing business, we will cut in half the budget deficit we inherited within four years," he said.

Republican criticism

But Republicans in both chambers of congress said the Democrats' proposed budget would hurt the ailing US economy and saddle future generations with too much debt.

In depth

"The administration's budget simply taxes too much, spends too much and borrows too much at a moment when we can least afford it," Mitch McConnell, the Republican senate minority leader, said on Thursday.

Both House and senate budget plans aim to boost spending on domestic programmes, raise taxes on the wealthy in two years' time and clear the way for action later in the year on Obama's priorities of healthcare, energy and education.

The news comes as world leaders at the G20 summit, including Obama, agreed on a compromise package of $1 trillion in stimulus funds and more market regulation to help combat the worst global economic crisis since the 1930s.

The White House has already enacted a $787bn economic stimulus measure signed into law by Obama in March in a bid to combat the deepening US recession.